US President Biden visited Intel’s Ocotillo campus in Chandler, Arizona, on March 20, 2024.
Kevin Lamarque | Reuters
Intel The stock fell as much as 4% in after-hours trading on Tuesday. After the company revealed In a filing with the U.S. Securities and Exchange Commission, long-awaited financial data for its semiconductor manufacturing business, commonly known as its foundry business, was released.
Intel said its foundry business would have an operating loss of $7 billion in 2023 on sales of $18.9 billion. This is larger than the $5.2 billion loss Intel reported for its foundry business in 2022, with sales of $25.7 billion.
This is the first time Intel has disclosed how much revenue it makes from its foundry business. Historically, Intel has both designed and manufactured its own chips and reported final chip sales to investors. Other U.S. semiconductor companies, such as Nvidia and AMD, design their own chips and then send them to Asian foundries, usually TSMC in Taiwan, for manufacturing.
Intel has been pitching a plan to investors led by Chief Executive Patrick Gelsinger that would continue to produce its own processors but also launch an outside foundry business to produce chips for other companies. Intel is one of the few U.S. companies doing cutting-edge semiconductor manufacturing in the United States, which is a big reason why it received nearly $20 billion in CHIPS Act funding last month.
Intel said on Tuesday that most of its foundry revenue currently comes from its own business. Intel also restated its product segment cost reporting as if it were a so-called “fabless” company and must count foundry as a cost.
Intel said its newly formed product division mainly includes personal computer and server processors, with operating income of US$11.3 billion and sales of US$47.7 in 2023.
Intel said on Tuesday it expects its foundry losses to peak in 2024 and eventually break even “midway” this quarter to the end of 2030. Intel previously said Microsoft would use its foundry services and that its revenue was $15 billion. The foundry is already booked.
“Intel foundries will deliver substantial earnings growth for Intel over time. 2024 is the low point for foundry operating losses,” Gelsinger said on a conference call with investors on Tuesday.
Intel said in a promotional video that the main reason for the lack of profitability in its foundry business was “the impact of past decisions.” In addition, Gelsinger also mentioned the company’s past “slow” adoption of a technology called EUV, which Used to manufacture state-of-the-art wafers.
About The Author
